Ranbaxy may have to pay huge fine, again

Ranbaxy may have to pay huge fine, again

Ranbaxy Laboratories, set to be merged with Sun Pharmaceutical Industries, might again have to pay a hefty penalty to the US authorities for alleged violations at its Toansa factory in Punjab.

The facility is currently banned from supplying products to the American market.

According to a regulatory source, an administrative subpoena issued recently to Ranbaxy’s active pharmaceutical ingredient manufacturing unit in Toansa has been triggered through an investigation into alleged fraud and violation of manufacturing norms.

“If the company fails to satisfy the authorities that there were no wrongdoings, it might again lead to a fine and other stringent action by the federal authority,” the source, in the know of developments, told Business Standard.

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Image: Ranbaxy has had several regulatory issues with the US drug authorities.Photographs: Adnan Abidi/Reuters

Ranbaxy may have to pay huge fine, again

Last year, Ranbaxy had to pay a fine of $500 million to the US authorities after it pleaded guilty to fraudulent activities and misrepresenting data to seek fast approvals.

However, Sun Pharma, which last week agreed to buy Ranbaxy in a proposed $4-billion deal, including a debt of $800 million, might not have to bear an additional brunt.

“In connection with the transaction, Daiichi Sankyo has agreed to indemnify Sun Pharma and Ranbaxy for, among other things, certain costs and expenses that might arise from the subpoena,” a spokesperson for Sun Pharma said.

Daiichi Sankyo and Ranbaxy did not respond to some questions sent by Business Standard in relation to the subpoena.

While announcing the proposed transaction with Sun Pharma last week, Daiichi Sankyo had said Ranbaxy had recently received a subpoena from the US Attorney for the District of New Jersey.

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Image: Sun Pharma, which last week agreed to buy Ranbaxy in a proposed $4-billion deal, including a debt of $800 million, might not have to bear an additional brunt.Photographs: Yorgos Karahalis/Reuters

Ranbaxy may have to pay huge fine, again

According to the notice, Ranbaxy must produce certain documents relating to issues previously raised by the Food and Drug Administration with respect to the company’s Toansa facility.

Ranbaxy, which was acquired by Japan’s Daiichi Sankyo in 2008 from Malvinder Mohan Singh and family, the promoters, is currently facing the US FDA’s import alert on four of its key facilities in India.

While its formulation manufacturing plants at Poanta Sahib (Himachal Pradesh) and Dewas (Madhya Pradesh) are under the US drug regulator’s scanner since 2006, its newly-commissioned factory in Mohali was barred from supplying to the American market in 2013.

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Image: Ranbaxy, which was acquired by Japan's Daiichi Sankyo in 2008 from Malvinder Mohan Singh and family, the promoters, is currently facing the US FDA's import alert on four of its key facilities in India.Photographs: Reuters